Risk identification and conduction model for financial institution IT outsourcing in China

In this paper we study the risks around IT outsourcing in Chinese financial institutions. We build a framework that explains the conduction paths from risk factors to risks, and from risks to resulting losses. Our framework describes relationships among 8 risk factors, 7 risks and 4 kinds of losses. Through case study we find that the main risk factors faced by Chinese financial institutions during IT outsourcing include limited IT literacy, limited choices of contractors, cultural conflict and objective misalignment with the contractors. These factors comprise the main differences between developing and developed countries in their financial institution IT outsourcing practices.